OK really i want to write about Leipzig, a tremendous city, fascinating historically, culturally, politically, great for the disabled and with a really good anecdote about Bach’s bones as well…and then there’s the Thomanerchor which is the finest singing you’ll ever hear…and so on…..but I can’t seem to get past the german railway system and its effect on isolated parts of Newcastle.
Yes, Newcastle. Where we’ve also been recently. It works like this. Getting the train to Liepzig we’re in, for the first time, the new main Berlin train station, the Hauptbahnhof, and it is fascinating because its a ‘turmbahnof’, that is, a ‘tower station’ with trains coming in and out on platforms built at different heights, so in effect above or below each other.
Now although the Berlin main station was so designed for engineering reasons, such stations were in the nineteenth century much more common at least in Germany because private train companies would not agree to let competitor companies use their tracks.
This is still an issue in the railway industry and is known as common access. This is now usually ensured by national government insistence and a European Union directive 91/440 and of course makes perfect sense. And would be a good example of how the public realm can intervene to frame the market in a way that tries to ensure effective competition.
Berlin’s vertiginous Hauptbahnhof.
So a nice young fella in a very bright red uniform takes us into the plate glass elevator down to our platform. And the ICE, the Inter City Express, is a great train. And the first train that I’ve been on since we arrived in Germany. Accessing it as a wheelchair user via a foot levered metal platform isn’t the last word in high tech cool but it works. The train quickly hits 200km/h and travels the 154 kms/95 miles to Leipzig in one hour and ten minutes.
And it has an intenet connection. So I think I might as well find out a bit more about ‘Deutsche Bahn’, (DB) German Railways. Checking their website they proudly tell a story of the company arising from the ashes of the failed nationalised railways of the former East and West Germany. I guess we’re in ‘British Rail’ territory here, state run industries bleeding the nation dry with their ill fitting, breakfast stained uniforms, rickety tea trolleys, over manned stations and mollycoddled staff too busy working out a yankee from the racing pages of the Sun to sell you a ticket for a train. (Although that’s not actually how I remember it but anyway….)
So DB was reconstituted and relaunched in 1993, making a lot of staff redundant along the way, and they are now officially an Aktien Gesellschaft, a privately run joint stock company, registered in Berlin and free to make a profit and under a heading titled…’The Foundation of Deutsche Bahn AG.’on their website, they proudly declare.
‘Deutsche Bahn was to earn its money in the marketplace and not pick it up in parliament. ‘
Nothing but contempt then for those lesser lame duck enterprises that cannot stand on their two feet, make their own way in the world or take responsibility for themselves, and who live off state handouts…..(.scary..how the phrases just roll off the tongue…)
And it is undoubtedly a very successful company what is not so prominent though on the website is that its still wholly owned by the German state, as are, through DB, the vast majority of its affiliates, and that as the near monopoly train provider in Germany it benefits from a yearly subsidy to the railway system, for example, in 2009, of a whopping 11.4 billion euro, mainly to DB’s regional train network. (….as revealed in a European Commission Study published in April 2013 and discussed in the really more interesting than you’d imagine….. Railway Gazette.)
As I read more I discover that the privatisation argument was had in Germany in the 1990s but a line was drawn at the point where it was realised that taxpayers’ money was going to be handed out to the company whether it was prvately or publicly run. And private shareholders taking profits whilst those profits came pretty much, through subsidies, straight from ordinary peoples’ pockets was felt to be going too far. Presented as evidence for how such an obviously untenable situation could become reality was, of course, (and apologies to people who’ve had their hand up for some time now)…….Britain.
And really that should have been that and as I was lowered onto the platform I should have been thinking about Liepzig, Bach’s home for most of his working life and still home to some of the best street musicians this side of Galway city, but a different question was starting to lurk potentially menacing my peace of mind for the whole trip.
DB, setting aside the massive German subsidy as the company itself seems to like to do, made a whopping operating profit of over two billion euros last year, and the Iron Man of austerity and privatisation, german Finance Minister, Wolfgang Schaueble takes about half a billion of that each year into his coffers. So the company takes from and gives to, through increasing public spending, everyday Germans, but, given DB has over 300,000 employees worldwide, what kind of relationship do they have to citizens of other countries, and maybe in particular people in Britain?
But at this point my beloved travelling companion took my iphone off me, and abusing her position as a fully able bodied person held it just above my head until I promised not to read anymore about railways and concentrate on the menu in the really rather nice Auerbach’s Keller restaurant where the greatest of all German writers, Goethe was known to enjoy a swift one after writing a few poems as a law student.
And I did manage to forget about it…..(ok ….a certain person locked my phone in the room safe and refused to tell me the code to get it back…) …..and we had a great time in Leipzig. But then as fate would have it parental duty took us to Newcastle, Durham and the North East a few weeks later. And a cursory glance at the local papers made clear that transport is a big issue here.
Not least because the Newcastle/Gateshead city council is trying to regain some control of the city’s bus network. The extended consultation period for their proposals ended last week, 4. June. They hope to have control of the planning of the city’s bus routes by 2015. Though denouced as Stalinist by one of the local bus owners the powers sought are similar to those enjoyed by that well known Stalinist, Boris Johnson, as Mayor of London.
At this point my travelling companion, as we sat in our city centre hotel in the shadow of St James Park, Newcastle United’s football ground, looked anxiously over my shoulder fearing a Railway Gazette google. On the other hand we’d already got drenched once venturing out as far as the nearby chemists…(….why is ibuprofen so expensive in Germany?)..and the rain wasn’t stopping any time soon so…
Given DB’s pride in being privately run it clearly made sense for them to use their commercial freedom to look for profitable opportunities in other national markets, particularly, according to their website, in the emerging markets of eastern Europe. But Deutsche Bahn as it turns out is a major player in Britain. It owns and runs Arriva Trains Wales, Chilterns Railways, CrossCountry Railways, Grand Central Railway, part of London Overground, runs the concession for Tyne and Wear Metro and it also provides through Arriva buses services in the North West, South East, Yorkshire, Midlands and the North East of England.
Now being an innocent in how these things work, or maybe from just believing the drift of everything in our culture from Dragons Den and the Apprentice to the endless millionaire troubleshooters sent in to rescue a hapless public sector that state dependency would be anathema to entrepreneurs, I was genuinely surprised to find that the canker of state subsidy is normal and indeed jealously guarded by private businesses in public transport.
And its not small beer. The Welsh government is committed to paying Arriva Trains Wales, i.e. Deutsche Bahn, a subsidy of £170m a year under the terms of a 15-year deal due to expire in 2018. Although it should be noted that this seems to be the ‘worst’ of the franchise arrangements, and overall the UK Government contributes a relatively small net subsidy of £38m to train operators, after their payments, referred to as premium payments, back to the UK government are taken into account.
Nonetheless a full 30% of total industry income each year, in 2012-13 a, by any measure impressive, £4 billion of taxpayer money is paid to Network Rail to preserve the rails and the common access of the companies to the network. (Office of Rail Regulation Report. GB Rail industry financial information. 2012-13.). A huge indirect subsidy to the franchise holding companies in other words. A number of rail franchises will be re-awarded in the coming months. I’d suggest not a single application will be suggesting they, as a private company, want to see an end to that particular state ‘interference’ in the rail industry.
Arriva point out that any profits they make are merely recycled into new investment in the railways. Which may be only right (I tried to verify this claim on the net but couldn’t….) although clearly DB must be taking its huge operating profits from somewhere.
And that somewhere it surprised me to learn might possibly partly be the humble buses of the North East. Mrs Thatched famously said buses were for losers and I can understand why some of them at least are feeling like losers given the conditions under which the private companies, like Deutsche Bahn’s Arriva operate the buses.
For a start the service is also subsidised ……In the initial privatisation arrangements it would seem that private bus companes, like Stagecoach or Arriva, would not have any responsibility for providing a service were it was not seen as profitable to do so. In practice this means outlying estates, where many older, poorer and disabled people lived only have a bus service when Newcastle/Gateshead City council provides them with one through Nexus, the still publicly owned transport executive. They provide ten per cent of the routes in the Newcastle/Gateshead area. In addition it was also agreed that Arriva and other companies would be reimbursed for the cost of bus passes for the elderly and disabled.
Overall this means Newcastle City Council pays £62 million a year in subsidising the buses in general, and while Arriva is far from the biggest bus company in the area, it has been revealed that £4,470,447.96 was paid out by the Tyne and Wear Passenger Transport Executive specifically to Arriva plc (DB) for the period 1/1/03 to 1/1/10 (Freedom of Information request.)
Meanwhile bus fares in the region have risen by an average of 3% per year above RPI inflation since 1995 generating a profit margin for running the buses estimated at 14% which is apparently generally agreed to be a very health margin indeed. (FT 17. September 2013.)
So to summarise a pensioner, with a bus pass, on an outlying estate in Newcastle subsidises through her council tax the substantial profits of a private bus company who may well not provide her with a service and then she pays through general regressive taxation, VAT for example, into indirect subsidies underpinning the profits of private rail companies. Not forgetting that, if the council is to be believed and they fail to stop the bus companies profiteering, before too long she may have no local (council provided) bus service at all.
And a part of her taxes from both sources ends up back at state owned Deutsche Bahn’s very swish headquarters in Potsdamer Platz in Berlin and, albeit a tiny fraction, into the 1.3 to 1.8 million euro per year salaries of the leading executives of Deutsche Bahn who proudly boast of their independence of government and government handouts.
On a happier note the rain did stop, and even before it did, it didn’t stop us being wonderfully entertained in Newcastle itself and along what is a very beautiful coastline. We enjoyed particularly Durham Cathedral, Holy Island and Tynmouth.
Two young fellas admire the fruits of open and transparent cooperation.
As it happens the mid Victorian train station at Tynmouth (shown in the picture) is a beautiful example of industrial architecture, painstakingly brought back to life by Millhouse Developments, a private company, who make no bones on their website about the fact that they did it in a joint venture with North Tyneside Council.